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Author: synchronicityII Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75797  
Subject: Re: Hi gang... wow!!! Date: 9/22/2013 12:30 AM
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NO... 2 things more;
1. A floor credit level, which the account receives no matter whether the index hits it or not, and,
2. A periodic ceiling credit level, which is the maximum the account receives.


Yes, and those two items are determined by reference to THE CHANGE IN THE INDEX ONLY, which, again, explicitly DOES NOT include dividends issued by the companies which comprise the index. It ONLY reflects the changes in the INDEX VALUES.

I then wrote:
If you can SUPPLY SOMETHING FROM A COMPANY THAT ISSUES IULs which states that the dividends ARE included in the calculation, please do.

You replied:
I've provided the references to options valuations.
Do you not understand that linked info?


I will repeat, again, that options valuations do NOT determine the amount the company credits towards the contract. Once again, PER THE INFORMATION WHICH YOU HAVE SUPPLIED, the issuer (Allianz in this case) has explicitly started that the amounts credited to the account reflect THE CHANGES IN THE INDEX (subject to the floors and caps).

I also realize that the "participation rate" enters into this, and that a percentage of the amount credited is tied to a fixed interest rate, with the remainder tied to changes in the index subject to caps and floors. However, I will reiterate, once again, that the amount credited to the account that is tied to changes in the index reflects ONLY THE CHANGE IN THE INDEX, which once again DOES NOT reflect dividends paid by the companies which comprise that index.

Ray has noted this. AJ has noted this. I am stating this, and the information from Allianz in particular (and from every other IUL issuer I have seen) explicitly states this.

I've explained how IULs are built using options.
Do you not understand how IULs work?


I understand very well how IULs work, thank you very much. And again, the amounts credited to the account reflect the changes in the INDEX, only, (yes, subject to caps and floors), and DO NOT include dividends. The fact that the issuer uses options as instruments to meet their reserve requirements for these contracts is a completely separate issue. You are trying, either accidentally or deliberately, to confuse the two issues.

-synchronicity
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